Fitbit Unveils Health-Focused Smartwatch

Fitbit desperately needs a hit. The company unveiled its first smartwatch Monday, hoping that the health-focused features of the device will reverse the hardware maker's declining influence in the wearables market.

The smartwatch, called the Fitbit Ionic, costs $299.95. It has a square touch screen similar to the one on the Apple Watch. It includes a heart-rate monitor, GPS tracking and four-day battery life. The watch, which is water-resistant up to 50 meters, can make wireless payments and store music offline from Pandora Media.

Fitbit recently lost its position as the top seller of wearable devices, falling behind Apple and China's Xiaomi.

Since going public two years ago to much fanfare, the novelty of its wrist-worn devices has waned with investors. Shares plunged to $5.73 at the close Friday, about a quarter of the $20 IPO price, as consumer tastes have evolved to favor products with more functions and third-party apps.

"Demonstration of consumer acceptance of the product is going to be very important for the stock: investors are very focused on their ability to stabilize," said Jim Duffy, an analyst at Stifel Nicolaus & Co.

The smartwatch is the company's first device to include a sensor that can estimate blood oxygen levels, called a relative SpO2 sensor. The Ionic will be preloaded with the apps for weather, payments, fitness, Starbucks Corp. and Pandora.

"Smartwatches are a platform for us to deliver the most powerful health tools the market has seen," CEO James Parks said. "The larger form factor lets us integrate many more advanced sensors, provide richer display and user interfaces for people."

Park is betting that its fitness-focused device will reinvigorate demand and differentiate the product from competitors in the smartwatch market, which is expected to reach almost $18 billion in 2020, according to data from IDC.

Fitbit is encouraging developers to make apps that focus on health and fitness. The company also is rolling out audio coaching sessions and virtual trainers on the smartwatch that take users through personalized workout sessions. It's also introducing guided health programs that give step-by-step advice to consumers on how to eat healthier, sleep better and exercise more.

In addition to the watch, Fitbit is rolling out an upgraded smart scale, the Aria 2, and $129.95 Bluetooth headphones that pair with the smartwatch.

The watch will compete with dozens of cheaper Android products and Apple Watch, which already has an established app store, tight integration with the iPhone and built-in music and payments services, not to mention hundreds of accessories.

For years, Park has been saying that he wants to transform Fitbit into a digital-health company. With the smartwatch rollout, the company has given hints as to what that plan will look like.

Fitbit is exploring how they can aid consumers with heart health, chronic diseases, stress and sleep apnea, according to Shelten Yuen, vice president of research. The company has started using the Fitbit Ionic to work with clinical researchers to measure sleep apnea. In the next several years, Fitbit aims to eventually deliver consumer subscriptions that predict health outcomes to move beyond hardware and into a recurring revenue stream, according to Joe Wittine, an analyst at Longbow research.

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